Consider the following statements and select the correct answer from the code given below: Assertion (A): State Finance Commission is constitutional body. Reason (R): Union Finance Commission cannot recommend financial assistace to panchayats.

The assertion is true and the reason is false, so C is correct. Article 243I, inserted by the 73rd Amendment in 1992, requires every state to constitute a State Finance Commission at intervals of five years. It reviews the finances of panchayats and recommends the distribution of taxes, duties, tolls and fees between the state and the panchayats, along with grants-in-aid. Because the Constitution mandates it, it is a constitutional body.

The reason fails because Article 280(3)(bb) explicitly empowers the Union Finance Commission to recommend measures that supplement the resources of panchayats and municipalities, based on the Consolidated Fund of India. Earlier Finance Commissions made such grants, and the 14th Finance Commission sharply increased them.

• Option A is wrong because the reason is false.
• Option B is wrong because the assertion is true.
• Option D is wrong because it reverses the truth values.

Core concept: fiscal federalism at the third tier. For Mains, this links to why local bodies remain financially dependent despite constitutional status.

Trap: candidates see the word "cannot" and assume the Union has no role in local bodies because local government is a state subject under Entry 5 of the State List. Article 280(3)(bb) is the exception that makes the reason false.